What impact will the credit crunch have on venture financing for startups?
An entrepreneur asked me recently if I was concerned about the impact the credit crunch will have on venture financing for startups. I responded:
For high quality companies, the short answer is no. The more nuanced answer is that
(i) The credit crunch will impact venture debt (already has) so people can’t count on that to extend their runway, so should raise a bit more than they would have done
(ii) If the economy indeed slips into recession (as a second order effect of the credit crunch), then this will impact sales growth for many startups.
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Infrastructure Project Financing Impervious to Credit Crunch
Research Recap submits: Infrastructure project financing has largely escaped the credit crunch and growth prospects appear solid in most parts of the world, according to Standard & Poor’s. “The stability that typifies project finance around the world has remained eminent so far this year, even through the credit market turmoil, the economic downturn, and the negative rating actions taken on monoline bond insurers,” S&P says in a new Industry Report Card for the sector. Despite some downgrades and negative outlook revisions and CreditWatch placements for several projects related to this last factor, credit quality in the sector remained healthy.Complete Story » [lien] [EN]
Why the U.S. Credit Crunch Will Not Affect India
Mark Fidelman submits: I’ve received numerous questions from colleagues and associates asking for my opinion on the U.S. credit crunch and its potential impact on the India economy and specifically the India real estate market. While complicated the short answer is no*, the impact should be minimal. You may have noticed that I added an asterisk and I’ll explain further below. First, we’ll quickly explore how the U.S. and Europe have been impacted, then discuss why Asia has minimal exposure, and finally I’ll explain the potential risks regarding my analysis. The U.S. is undergoing a massive credit crunch due to the losses by large U.S. and European investment banks in the collateralized debt obligation markets (CDOs). The credit crunch is a result of banks and other financial institutions’ reluctance to buy CDO’s which in turn reduces the credit and loans extended by traditional mortgage lenders. [lien] [EN]
Solar Shares Under Pressure From Credit Crunch and Pricing
Eric Savitz (Barron's) submits: As the Solar Power International conference continued Wednesday in San Diego, solar stocks continue to lose ground in the face of ongoing concerns about both the ongoing credit crunch and the possibility of a steep drop in pricing in 2009. Deutsche Bank’s Steve O’Rourke observed in a research note Wednesday morning that while companies expect some negative impact from tighter credit in 2009, “quantification is presently impossible.” On pricing, he notes that most solar module companies continue to forecast a price decline in 2009 of under 10% - but he says that a drop of more than 20% is “increasingly likely.”Complete Story » [lien] [EN]
Credit crunch
Meanwhile, out in the nonpolitical world (although everything is political these days), the new Federal Reserve senior loan officer survey shows an incredible credit crunch in progress — worse than the crunches following the S&L crisis, worse than the brief crunch when LTCM blew up, worse than the dotcom bust. This is pretty grim. Worst credit crunch on record [lien] [EN]
The credit crunch hits students
This is awful: The credit crunch that has so far caused more than $100 billion of losses for big Wall Street investment firms now extends to students in Michigan, and it could soon hit many other borrowers, ranging from California museums to the prestigious Deerfield Academy prep school in Massachusetts. Yesterday, the Michigan Higher Education Student Loan Authority, a state agency, said on its Web site that “due to the current and unprecedented capital-markets disruption” it will stop making loans under the state’s Michigan Alternative Student Loan, or MI-Loan, program. More than 100 Michigan colleges and universities participate in the program. In the past few days, problems have mounted for many borrowers as an obscure — but important — corner of the credit market called auction. [lien] [EN]
Look Around - The Credit Crunch Has Arrived
Mark McQueen (Wellington Financial) submits: News flash: the credit crunch is finally here.Complete Story » [lien] [EN]
Layman's Guide To The Credit Crunch [Subprime Meltdown]
So you understand how homeowners took out risky mortgages and such, but what about C.D.O's, liquidity puts, and how they all play into the global credit crunch? If you're still scratching your head, this article breaks it all down and puts it into perspective.But it turned out that many banks had also sold complex insurance policies on the mortgage debt. That left them on the hook when homeowners who had taken out a wishful-thinking mortgage could no longer get out of it by flipping their house for a profit. Many of these bets were not huge, but were so highly leveraged that any losses became magnified. If that $100 million investment I described above were to lose just $1 million of its value, the investor who put up only $1 million would lose everything.Just picture a collapsing Jenga tower and you're just about there. [lien] [EN]
“Golf’s credit crunch” causing agents to lose cash, sleep
Rapidly vanishing lines of credit are not only taking their toll on inflated asset prices and the global financial markets in general, but also in the willingness of companies to not only underwrite sporting events, but also to market their brands through athletes. During financial stress, marketing budgets are historically one of the first to get slashed, and this current slowdown is no exception. One of the sports which will be hit the hardest in the coming months and year(s) will be golf. Sports Business Journal (SBJ) reported several weeks ago, for instance, that “golf is unusually dependent on revenue from the financial category, with about 25 percent of network ad time coming from that area. Plus, nearly one-third of all events sanctioned by the PGA Tour are sponsored by banks. [lien] [EN]
Who’s To Blame For The Credit Crunch? Pirates!
Who’s responsible for the current credit crunch? According to Peter Hayes of the University of Sunderland, it’s the pirates! Dr Hayes says: “Pirates elected their captain, voted on major decisions and distributed their booty in roughly equal shares, and there is something in the idea that a pirate ship is the equivalent of a modern corporation. “In [...] [lien] [EN]
Absence of Horrible News Is Good News: Signs Credit Crunch Is Easing
FP Trading Desk submits: The stock market looks to be presenting an opportunity to buy into a rally amid some positive signs the credit crunch is easing, Desjardins strategists says. The strategists said in a note to investors:Complete Story » [lien] [EN]
Gadget Bargains for the Credit Crunch [Dealzmodo]
The stock market may be shrieking in pain, but you can drown out the agony by shopping for great deals on audio equipment. We're talking about an Onkyo surround sound system with six speakers and a receiver for under $300, or maybe a set of JVC noise canceling headphones for under $40. Close your eyes real tight and blast the ABBA, because you're about to save some big money money money money. (OK, maybe just three monies, but definitely more than two.) Audio accessories • JVC HANC100 Noise-Cancelling Headphones for $37.97 (originally $99.95). • JVC HANC250 Noise-Cancelling Headphones for $105.97 (originally $199.95). • Beyerdynamic DT 770 Stereo Headphones for $113.77 (originally $319). • Panasonic RP-HC500 Noise-Cancelling Headphones for $90.65 (originally $199.99). • Slip Profile CD System for $89 (originally $125). [lien] [EN]
Gadget Bargains for the Credit Crunch [Dealzmodo]
We've got some pretty nice deals in today's Dealzmodo Roundup, including a way for you to snag a $10 Best Buy gift card and 1600 MS points when you preorder Gears of War 2, a $135 iPod nano and a deal to get $100 off a Blu-ray player when you snag some movies along with it. Hit the jump for the full list of the deals. Gaming • PlayStation Eye camera for $23 (originally $40). • Receive 1600 MS Points and a $10 gift card when you pre-order Gears of War 2 at any Circuity City for $59.99. Hard drives and flash drives • Seagate 400gb 7200RPM Internal Hard Drive for $49.99 (originally $64.99). • Western Digital 500GB USB 2.0 External Hard Drive for $69.00 (originally $119.99). • 16GB USB Flash Drive for $24 (originally $52.99 - valid only on 10/29). Audio/Video and Accessories • Save $100 when you buy a Blu. [lien] [EN]
Gadget Bargains For the Credit Crunch [Dealzmodo]
Feeling the economic pinch at work? Not to worry—today's Dealzmodo Roundup is choc-full of office-bound bargains like a Pagepro printer for $330 (down from $1082) and a comfortable-looking Tillman leather executive chair for $190 (down from $280). We even threw in a $170 Sharp Blu-ray player and an $80 iGroove speaker system to help you unwind from a long, stressful day. Just be thankful you still have a job to stress over. Printers • Pagepro 5650 45PPM Office Printer for $329.99 (originally $1,081.99). • Lexmark 26ppm Wireless InkJet MFC/All-In-One Color Printer for $49.99 (originally $99.99). Fax machine and copier combos • Brother Fax-2820 Laser Fax Machine and Copier for $99.99 (originally $169.99). • Brother MFC-885cw Color Inkjet Multi-Function Printer, Fax Machine and Scanner with Built in Wireless for $139. [lien] [EN]
Gadget Bargains for the Credit Crunch [Dealzmodo]
It goes unsaid that Halloween have bigger deals than even Black Friday. Just think about all those tiny, defenseless kids walking around with pillow cases chock full of candy. Oh, and you can score deals on TVs, DVDs and other stuff, too. HDTVs • Corion Digital Lifestyles 42'' 720p HDTV for $599.99 plus free shipping (originally $999.99 - use coupon code "TV1027100"). • Refurbished Toshiba 42'' 720p HDTV for $649.99 plus free shipping (originally $2,299.99). Laptops • Toshiba Satellite Notebook Pentium Dual-Core with 3GB Memory, 200 GB HD, and webcam for $589.99 (originally $1,299). Gaming • Nintendo Wii System - Mario and Sonic Bundle for $399.99 (originally $499.99). • Xbox 360 Live Vision Gold pack bundle for $49.99 (originally $79.99 - in store only at GameStop and Best Buy). [lien] [EN]